The recent surge in Bitcoin price was preceded by large amounts of BTC leaving centralized exchanges. Over the past week, investors resorted to exchanges to remove their BTC holdings, which were reportedly meant for safekeeping in private wallets.
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On October 18, crypto analyst Ali Charts revealed that over 30,000 BTC had left exchanges. The data covers a period of five days, showing massive withdrawals by crypto investors from these centralized exchanges.
The chart shared by the analyst shows that the accumulation started at the beginning of the week and continued until the rally started. This accumulation ultimately led to a total of 33,000 BTC transferred to private wallets, worth approximately $925 million.
BTC is leaving the exchange Source:
Typically, when Bitcoin moves away from exchanges, it is bullish for the coin because it means these investors are not looking to sell their tokens right now. The smaller the number of investors selling their BTC, the less selling pressure there will be on the coin.
As selling pressure decreases, demand begins to increase over time and the result is often a price explosion. That’s likely what happened on Thursday as the price of Bitcoin began to rise, briefly reaching $30,000 and then falling back down.
Bitcoin open interest increased
As the price of Bitcoin has increased, open interest in the asset has also increased. Data from CoinGlass shows that over the past 24 hours, total Bitcoin open interest has increased by approximately 8.5%. This means that more than $1.3 billion was added in open interest by investors over the past day.
This rapid increase in open interest shows that there is increased willingness among investors to participate in the market. Additionally, most of the open interest has flowed towards short contracts, meaning investors are expecting the price of BTC to fall.
Open interest increased by 8%. Source: CoinGlass
However, this could lead to what is called a short squeeze, where the price of Bitcoin rises once again and shakes off the shooters in the market. This could lead to the liquidation of millions of dollars in shorts, leading to huge losses for those betting on the price of Bitcoin falling. If shorts prevail, Bitcoin could fall back to the $28,000 level.
For now, Bitcoin is struggling to hold the support at $29,500. A fall below this support would put the bears in control, leaving the next important support for Bitcoin at $29,000.
BTC sits above $29,600 Source: BTCUSD on tradingview.com
Featured image from MarketWatch, chart from tradingview.com
Source: bitcoinist.com
